What is a Fair Credit Score?

If you’re wondering what a fair credit score is, you’re not alone. Many people have questions about credit scores and what they mean. Here’s a quick rundown of what a fair credit score is and how it can impact your life.

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Introduction

Your credit score is a number that represents your creditworthiness – or how likely you are to repay a loan. It is based on your credit history, which is a record of your payments on loans and other debts. The higher your score, the more likely you are to get approved for a loan and to get a lower interest rate.

What is a Fair Credit Score?

A fair credit score is a credit score that is considered to be fair by lenders. It is not too high or too low. A fair credit score is in the range of 650 to 699. If your credit score is in this range, you may be able to get a loan from a lender, but you will probably not get the best terms.

Credit Utilization

Credit utilization is one factor that makes up your credit score. It usually refers to the amount of revolving credit you’re using relative to your credit limit. For example, if you have a $1,000 credit limit and use $500 of that credit, your credit utilization would be 50%.

Lenders like to see low credit utilization because it indicates that you’re not maxing out your cards and using too much of your available credit. High credit utilization may hurt your credit score, because it could indicate to lenders that you’re at a higher risk of defaulting on your debt obligations.

Utilization is just one factor that makes up your credit score, however. Other factors include your payment history, the types of accounts in your name, the length of your credit history and any new applications for credit.

Payment History

One of the most important factors in your credit score is your payment history. This is a record of how you have handled credit in the past, and includes such things as whether you have made your payments on time, and if you have ever missed a payment or been late with a payment. Payment history makes up 35% of your FICO score, so it is important to try to keep your payment history clean.

Length of Credit History

One of the factors that goes into calculating your credit score is the length of your credit history. This is generally measured by looking at the date of your first credit account and weighting it against the average age of all your accounts. The longer your credit history, the better.

There are a few other things to keep in mind when it comes to your credit history and score. If you have a lot of accounts with a short credit history, it can look like you’re trying to open too many lines of credit at once, which can be a red flag for lenders. Additionally, closing old accounts can shorten your overall credit history, which could lower your score.

Types of Credit

Credit can generally be divided into two types: revolving credit and installment credit. Installment credit is a loan that you agree to pay back over a set period of time, usually two years or more. A mortgage is an example of an installment loan. Revolving credit, such as credit card debt, does not have a set payoff date. This type of credit allows you to borrow against a line of credit up to a certain limit. As long as you make your minimum payments on time, you can continue to use the account.

There are many other types of credit, such as auto loans, student loans, and home equity loans, but these are the two most common. In order to qualify for most loans, you will need to have a good credit score. A good credit score is generally considered to be a score of 700 or above. However, what is considered a “good” score may vary depending on the type of loan you are applying for and the lender’s standards.

A fair credit score is generally considered to be anything between 640 and699.If your score falls in this range, you may still be able to qualify for some loans, but you may pay higher interest rates than those with good or excellent scores.

There are a number of things you can do to improve your credit score if it’s not where you want it to be. You can start by paying all of your bills on time and keeping your balances low on your revolving accounts. You can also avoid opening too many new accounts at once and check your credit report regularly for errors.

Conclusion

In general, a fair credit score is any score that falls somewhere between 630 and 689 on the VantageScore 3.0 scale. You might still be able to get some credit products with a score in this range, but you might have to pay higher interest rates. A fair credit score is also sometimes called a “bad” or “poor” credit score.